The Poor Made Visible

An interview with Rebecca M. Blank
Dean, Gerald R. Ford School of Public Policy
Co-Director, National Poverty Center
Henry Carter Adams Collegiate Professor of Public Policy,
University of Michigan

I've spent a lot of the time in the last five years evaluating the effects of the welfare reform bill of 1996. So far, I can say the reform has encouraged many welfare recipients to get jobs and earn their own incomes. But few have managed to escape poverty, and the legislation's impact on mothers and children who might lose welfare benefits before they have stable employment is a cause for concern.

Along certain lines, the reform has succeeded far beyond anyone's expectations. Caseloads have fallen by more than 50 percent since 1996. Labor force participation among single mothers increased by more than 10 percentage points between 1995-96 and 2000, to nearly 80 percent, although some of these gains have now been lost in the last few years.

The fact that caseloads have fallen and workforce participation has gone up doesn't necessarily mean the bill is a huge success, however. Have the new workers increased their real incomes over what they received from welfare? Most people haven't gained a lot. We might be talking about an additional $500 to $1,000 a year in many cases. But the evidence says we at least haven't made many people worse off through 2001, that is, and that's a big caveat that I'm going to come back to.

If a higher percentage of the poor are now earning their income rather than receiving welfare, the question remains, will significant numbers escape poverty in the long run? That's a big concern of mine, and I have others as well. What's happening to the kids? When we emphasize new jobs, we're focusing on the moms, but how has the reform affected family life? The strongest, explicit purpose written into the bill was to lower out-of-wedlock childbearing and increase marriage rates among the poor. It said nothing about increasing jobs, decreasing welfare caseloads or benefiting family life.

Did the bill accomplish its stated purpose? Out-of-wedlock childbearing has declined recently, but that trend started before passage of this bill. As for promoting marriage, there's not much evidence so far that this has occurred. The bigger effect has been to increase cohabitation rather than marriage.

Now let's return to the biggest question around all of the positive economic statistics: How many changes were due to the policy and how many of them reflect the incredibly strong economy between 1996 and 2001? People left welfare and went to work, but they clearly would have done that in larger numbers anyway, given what was going on in the labor market and the economy. I've done quite a bit of research trying to tease out how much of this is policy, how much of this effect is economy and how much of this effect is other things.

Evidence shows pretty clearly that at least three things the 1996 legislation, the dynamic economy and other policy changes all mattered a lot to the welfare picture. The most important of these other policy changes were the expansions in the earned income tax credit, which added to people's earnings. If the current economic slowdown continues, unemployment will keep creeping up, and we will steadily erode some of the work gains of the last decade.